Binary Options Basics

How To Trade Binary Options
The financial world’s new trend
Welcome to the new, exciting world of trading binary options! Until recently, binary options trading was exclusive to big investors and brokers, but is now accessible to all investors regardless of financial background. With low risk involved, no downloads, and small startup required, binary options allows you to make high profits in a short period of time.

Quick guide to trading binary options
The idea is to profit from changes in assets pricing. You need to decide whether the price will go up or down during a determined period of time. You choose the asset, investment amount, and the expiration time. Your trade can be as long as a month or a quick trade for the end of the hour.
To begin trading, you must create an account with a binary options broker so you can access a binary options trading platform. The minimum deposit required to trade varies depending on the currency you will be trading in and the rules of the specific binary options broker that you select, so it is normally a good idea to have a binary options broker recommended to you by someone familiar with how they operate and their trading policies.How to enter a binary options trade
Once you have decided on an asset to trade along with the direction and expiry, you only need to follow a few simple steps to enter a trade in the amount you select based on the currency of your account. Below you will see “step by step” instructions of exactly how to enter a trade. Once your selections have been made and the trade is accepted by the broker, all you have to do is sit back and wait for your trade to expire “in the money”, meaning you will profit the designated percentage you selected when you first entered the trade or “out of the money” meaning you will lose the amount traded less the refund (if any) given by the broker on the trade.
Note: Check your broker information for refund amount for losing trades. Some give up to 15%. In any case, you know BEFORE you place the trade what your profit or loss will be when the trade expires.

Common Payouts vs Refunds for Binary Option Trading:
70% In the Money – 15% Out of the Money Refund
75% In the Money – 10% Out of the Money Refund
80% In the Money – 0% Out of the Money Refund
Note: Payouts vs Refunds vary depending on different brokers and assets.

Binary Options Terminology

Binary Options: also known as a digital option or fixed return options, is an option in which payout is determined at the onset of the contract. It pays a fixed amount of cash if the option expires in-the-money, independent of the magnitude by which the price of the underlying asset moves. The option cannot be sold before its expiration

Underlying Asset: a commodity, index, stock, currency pair or any other financial asset that constitutes the basis for creating an option

Call Option: an option that gives the investor a profit when the underlying asset increases in price compared with the level it was purchased at

Put Option: an option that gives the investor a profit when the underlying asset depreciates relative to the purchase level

Expiry: The specified time that the option position closes and settlement is made to your account

Strike Price: The specified price of the option

In-the-money: the spot price on the underlying security is in a favorable position relative to the strike price of the contract

Out-of-the-money: the spot price on the underlying security is not in a favorable position relative to the strike price of the contract